DSP’s looking to solve inventory problems need to look at alternatives to Ads.txt

Transparency, trust and accuracy have become major concerns for all those involved with the buying and selling of digital advertisements. As technology advances, budgets increase, and demand takes off, the risk of fraud and risky activity increases.

Duplicate inventory, as a result of publishers forming excessive amounts of relationships with exchanges to sell the same inventory, has become an increasing concern as the digital advertising landscape matures. This phenomenon has dramatically increased with the introduction of header bidding which has allowed publishers to easily integrate with many ad exchanges simultaneously. Publishers benefit from the exponential growth in demand partners by increasing fill rates and potentially garnering higher bid CPMs for inventory sold programmatically.

In many situations, these exchange partners will form additional relationships with other exchanges. This second tier of exchanges are not necessarily approved by the publisher and will serve ads without the knowledge of the publisher. These “unauthorized resellers” are not necessarily bad sellers or harmful to publishers but multiple tiers of partnerships that result in duplicative inventory. This also makes counterfeit inventory more difficult to identify, hurting brand safety by affecting transparency and trust. DSP’s have largely managed this issue using ad verification solutions to identify sellers that submit URLs in bid requests that do not match where ads actually run and then notify exchanges and shut down the sellers.

So if ad fraud can be managed, then why are unauthorized re-sellers a bad thing for the DSP’s? Duplicate inventory can create a significant financial and operational burden for DSP’s while creating no additional incremental value. When a DSP processes bid requests within exchange environments it costs the DSP costs money. To provide context, DSPs could potentially see 100 billion ad opportunities per day through their multiple exchange partners. This level of volume requires these organizations to have a multiple servers in order to support it. This is a fixed cost. In addition, the setup and maintenance of this infrastructure adds additional expenditure to the organization. So when the DSP receives 10 requests for the same exact ad opportunity for which only one ad can run, this creates artificial volume – adding superfluous opportunities for the DSP’s bidders to evaluate, increasing server support and ultimately costs. The DSP’s “opportunity” cost also rises because duplicate volume takes up capacity within the infrastructure that could have been otherwise used to evaluate more unique opportunities for each of our clients’ campaigns. As a result, potential revenue is limited as much by the amount of unique inventory they are able to access as by advertiser demand….